Iron ore prices are likely to decline through the next year due to supply growth and a softening Chinese demand outlook, African Rainbow Minerals (ARM) chairman Patrice Motsepe and CEO Phillip Tobias said on Friday.

In addition, the weakness in platinum group metals (PGM) prices is also persisting, despite seemingly supportive fundamentals, the executives said at the release of ARM’s results for the six months to December 31.

Coal and platinum are two of the key mining commodity exports from South Africa.

Unpacking the factors impacting the PGM prices, they said near-term increases in refined PGM exports from South Africa had exceeded market expectations, while Chinese imports remain subdued.

In Western markets, automotive demand for PGM remained weak, with European sales under pressure and the US market experiencing high inventory levels, leading to short-term production cuts.

Nevertheless, they believe the medium to long-term outlook for platinum, palladium, and rhodium is positive. Demand for internal combustion engine vehicles, including hybrids, alongside increasingly stringent emissions regulations, is expected to support consumption.

Additionally, emerging applications in hydrogen technology and advanced industrial processes could provide significant long-term demand growth, they said.

On the iron ore price outlook, they said Chinese GDP growth was expected to slow to 4.5% in 2025, the weakest pace in more than 30 years, excluding the Covid-19 pandemic years.

Economic activity in China had weakened due to declines in real estate investment and slower consumption growth.

“Global coal consumption is anticipated to decline in 2025 and 2026, driven by the global energy transition and increasing focus on decarbonisation. ARM is not making any new coal investments, and we will continue running existing assets to the end of their current economic lives,” they said.

ARM’s interim dividend fell 33% to R4.50 per share for the six-month period, but the miner was left with a healthy cash balance of R6.06 billion versus R7.19bn at the same time a year before. Headline earnings decreased by 49% to R1.52bn.

ARM Ferrous headline earnings decreased 33% to R1.88bn due to a decline in headline earnings of the iron ore division, partially offset by an increase in headline earnings of the manganese division.

Manganese headline earnings were higher due to higher average US dollar manganese ore prices, partially offset by lower export sales volumes and a stronger rand/US dollar exchange rate.

ARM Platinum reported a R689m headline loss (R282m loss), largely due to higher operational losses at Bokoni mine.

Bokoni’s headline loss near doubled to R620m (R341m loss), driven mainly by lower-than-guided PGM ounce production and increased mechanised development costs at Middelpunt in the ramp-up of production.

Iron ore headline earnings were lower due to lower average realised US dollar export prices, a stronger rand/US dollar exchange rate and lower sales volumes.

Iron ore production volumes were lower due to reduced offtake from ArcelorMittal South Africa (AMSA).

Unit costs in iron ore remained under pressure due to lower production volumes and above-inflation increases in costs at the iron ore and coal operations.

PGM production volumes rose marginally, but mining development costs were higher due to the mine being in ramp-up phase, leading to higher operational losses.

Construction of ARM Platinum's 100MW solar photovoltaic facility was on schedule, with the first power delivery expected in August 2025.

The renewable energy feasibility study at ARM Ferrous was completed in December and various funding models and energy mix options were being reviewed.

BUSINESS REPORT

patric motsepe

Iron ore prices expected to decline amidst supply growth, weak Chinese demand - African Rainbow Minerals